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Previous studies have shown mixed results concerning the effects of participation in active labour market policy programmes (ALMPs) on the longer-term scars in the form of poor income development and low job stability following the end of an unemployment spell. Most previous studies, however, have been limited both in the time frame used and to particular programmes. We argue that human capital investments are long-term investments and should therefore also be investigated from a long-term perspective. ALMP training and ALMPs as subsidised employment also represent different types of human capital investments that may produce effects that are differently distributed over time. In order to handle these issues, this article uses a longitudinal register-based dataset in which all long-term (more than six months) unemployed Swedes in 1993, who had no labour market problems in 1992, were followed for ten years. We found positive effects of ALMP participation concerning both the probability of reaching pre-unemployment incomes and a reduction in the hazard of exiting the labour market, while the effect on the probability of having an unemployment-free year was mixed. The effects of the two forms of ALMPs were differently distributed over time, with ALMP employment having an immediate effect that decreased relatively quickly and ALMP training having a longer-term effect.

Although the relationship between unemployment and poor mental well-being
has long been an area of interest within behavioural science, the
role of state intervention in the unemployment situation has not been
thoroughly investigated. This article investigates how unemployment benefit
systems and active labour market policy measures affect mental well-being
among the unemployed in Sweden. The study uses a longitudinal
and nationally representative survey of 3,500 unemployed Swedes. Three
different types of active labour market policy measures involving the
unemployed were studied, ‘activation’, ‘vocational training’ and ‘work-place
participation’ measures. Of these only involvement in ‘workplace
participation’ was found to have a clearly positive effect on mental well-being
among those participating. Of the two Swedish unemployment
benefit systems, the more generous income replacement Unemployment
Benefits and the less generous flat rate Cash Unemployment Benefits, only
access to income replacement Unemployment Benefits was found to mediate
the mental well-being impact of unemployment. The positive effect of
access to income replacement Unemployment Benefits was further accentuated
when unemployment was prolonged. Those with access to this
benefit system seemed to suffer no further deterioration of mental well-being,
while the mental well-being of the rest of the unemployed further
deteriorated.

The relationship between unemployment and mental well-being has been thoroughly researched. Longitudinal studies have shown unemployment to have negative impact on mental well-being, whereas re-employment has positive impact. This research has however taken little interest in a more complex concept of labour market status than just ‘employment versus unemployment’, or indeed other alternative exit routes from unemployment. In this article, an investigation is made into the impact of different exit routes from unemployment on mental well-being. This is done using a longitudinal and nationally representative survey of 3,500 unemployed Swedes. The results indicate that the mental well-being outcome of exiting unemployment is related to how the new status resolves economic difficulties and the uncertainty faced in the unemployment situation. The increase in mental well-being when re-entering paid labour is differentiated depending on the contractual situation. Exit to permanent employment means a larger increase in mental well-being than exit to temporary employment or self-employment. Exit to university education increases mental well-being, whereas exit to high-school equivalent studies does not. Exit from unemployment to maternity/paternity leave increases mental well-being, exit to sick leave reduces mental well-being, while exit to early retirement pension does not significantly change the mental well-being.

Classic research on unemployment and mental health has focused on the functions of employment. These functions are considered to be of equal importance for all unemployed. A critique of this perspective has been that it views the unemployed as passive and homogeneous. Instead, an agency approach has been suggested, which focuses on the individual goals of the unemployed. This paper develops and tests a model for understanding the differentiated mental consequences of unemployment, which on a theoretical level integrates both the structural restrictions of the unemployment situation and the agency of the individual. The model is based on previous findings which indicate that mental well-being is dependent on the economic need for employment, on the one hand, and on the psychosocial need for employment, on the other hand. The model integrates both these aspects and the results show that the combined effect is of central importance for the differentiated mental well-being of the unemployed. The analysis is based on a longitudinal survey of 3,500 randomly selected, unemployed Swedes.

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